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Estate and Gift Taxes and Choosing Beneficiaries (Elder Law Handbook)

Planning for Loss of Health

This article provides an overview of estate and gift taxes, exemptions, and strategies to managing your estate.

The Houston Bar Association's Elder Law Handbook (for 2019-2020) contains information about resources specific to Harris County, plus material about Texas elder law, federal estate and gift taxes, and beneficiary designations. 

Elder Law Handbook overview

The handbook is in a question-and-answer format, divided into elder law topics. All elder law issues cannot be addressed in one handbook. But it may give you an overview of your rights and remedies.

This handbook is based on Texas law and is meant to inform you, not advise you. Talk to a lawyer about your situation. 

Note: The 2019-2020 Elder Law Handbook may not reflect the most recent changes to the tax code. Talk to a tax attorney or other tax professional to evaluate your options fully. To find legal help, use's legal help finder tool, or call the State Bar of Texas Lawyer Referral and Information Service.

Where can I learn about estate and gift taxes?

An estate tax is a tax on your right to transfer property at death. Gift taxes are taxes on gratuitous transfers of property that exceed a certain value. The Elder Law Handbook provides an overview summary of both estate and gift taxes. For an in-depth understanding of the qualifying assets and exemptions, please view the Internal Revenue Service's information on estate and gift taxes. The IRS recommends you seek the assistance of an attorney if your estate is larger than $1,000,000.

Who pays the estate or gift tax?

Estate taxes are charged to the estate during administration if the value of the estate is higher than the current exemption. This means the tax will be deducted from your estate prior to distribution to your heirs. Note: the estate exemption changes almost yearly. As of 2023, the estate tax exemption is $12,920,000. 

Visit the IRS's article explaining Estate Tax and Filing Thresholds at the Year of Death to learn more about the taxable estate and exemptions.

Gift taxes are a tax on transfers of property from one individual to another in exchange for nothing in return or less than market value. The intent of the individual giving the gift does not always apply. Generally, the donor, or the person giving the gift is responsible for paying the gift tax. An annual exclusion applies to gift taxes to each recipient. In 2022, the annual exclusion is up to $16,000. This means that you can give each individual recipient up to $16,000 in gift value before the gift tax applies.

Note: gift taxes do not apply to:

  • Tuition or medical expenses you (directly) paid for someone else;
  • Gifts made to your spouse; or
  • Gifts to a political organization.

To stay up to date on exemptions and exclusions, visit the IRS Estate and Gift Tax guide. 

When do I file?

Estate tax returns are due within nine months of the date of death. Gift tax returns are due on April 15 the year after the gift was made. These are federal taxes, so be sure to contact your tax advisor, or visit the Internal Revenue Service website for proper forms and submission instructions. 

Who should be my IRA beneficiary?

To ensure that your IRAs are distributed to the beneficiaries you want, put it in writing with your IRA custodian. The Elder Law Handbook provides information on designating the different types of beneficiaries, and how to prevent your IRA from going to the wrong person. Refer to page 7 of the handbook for more information on designating IRA beneficiaries.